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Green Cove still pondering $10 million loan

Posted
Wednesday, January 24, 2018 1:42 pm

Kile Brewer

GREEN COVE SPRINGS – In its second meeting of the year, the Green Cove Springs City Council saw a short agenda with two important items for discussion and the final reading of a related ordinance.

The two items served as updates and platforms for conversations among the council on the two current utility overhauls.

The biggest news of the evening came from an update on the city’s attempts to rebuild its wastewater treatment, wastewater collection and reclaimed water systems. By phasing the project out, the city will extend the length of the project by a couple years, but significantly increase the city’s chances of receiving grants to cover the costs of the project.

“Phasing the project will have an impact on the timeline,” said Assistant City Manager Mike Null. “The reason for doing this is to maximize grant dollars which would have an impact on the annual debt service, which translates to an impact on the average monthly bill for our wastewater customers.”

The numbers really tell the story of the impact of the expected uptick in grant dollars to be spent in lieu of the city’s own cash. Budgeted rate increases from the project’s original timeline saw 18.3 percent, 17.5 percent and 16.6 percent increases over the next three years, in line with the 16.7 percent increase customers saw in the current fiscal year. With the new phasing these numbers would drop to 9 percent, 8.3 percent and 7.7 percent increases. In the old plan, customers would’ve been paying about $50 per month, on average, by the year 2021. Now, they will stay under $50 until 2025.

Also on the agenda was the final reading of an ordinance allowing the council to borrow an amount up to $10.7 million to expedite the capital projects planned for its electric utility. The item was given a unanimous vote before moving through the agenda to discuss how they want to pursue that money.

Through an hour-long discussion, council members considered all their options following a presentation from Orlando-based financial advisor Jeremy Niedtfeldt of PFM Financial Advisors LLC.

At the end of the conversation, the council decided to pursue four options – 15 and 20 year fixed rate bonds that would come directly from a bank and another option, 15 and 20 year bond swaps requested by Council Member Van Royal who was unhappy with the high interest rates estimated on the bank loans. Though bond swapping increases the city’s risk and Niedtfeldt advised against the practice, the council decided to shop all its options in an effort to try and lower the interest rates on the loan that could end up costing the city millions in interest over the next two decades.

“I get the feeling that you’re kind of hedging away from this swap,” Royal said. “It’s easy to take the easy way, the conservative way, and you can be wrong in being too liberal. I want to know, so that I can maximize my vote, where we stand [with a swap].”

Niedtfeldt said his company would work with City Manager Danielle Judd to finalize its bond requests and run it by members of the council before submitting it to banks for quotes. Council will expect to see information from the banks by its first meeting in March when they will decide whether or not to go forward with the borrowing now, or wait if they feel the transaction would put them in financial turmoil.